The company will continue to focus on building software for personal computers, phones and even cars.
Proponents of bleeding-edge internet technologies have long shown a preference for carving the information technology industry up into those who get it and those who don't.

It's a formulation that typically lines up Google, Salesforce.com and Facebook on the side of the savvy while Microsoft, with its catalogue of desktop-dependent software, is more often than not labelled a dunce.

Not surprisingly, the formulation is one that Microsoft senior software architect Miha Kralj rejects, and he points to an enormous, $US500 million data centre that the company is building on the outskirts of Chicago as proof.

The data centre, which will consume as much power as an aluminum smelter, sits near the centre of Microsoft's cloud computing strategy and Kralj asserts the company is putting at least as much effort into internet applications as rivals Google and Yahoo!.

"If you look at the hardware market for servers today, more than one third of all the servers produced on the planet are going to only three buyers - Microsoft, Google and Yahoo!," he says.

"So we are very much building a humungous, cloud-type capacity of on-demand hardware that will be all about delivering cloud-based information technology as a service."

For the uninitiated, cloud computing is a new variation on an old dream of delivering software over the internet in much the same way that a utility delivers electricity over a power grid.

Previous names for cloud computing have included application service provision (ASP) and utility computing. Anyone who has ever logged into an internet mail service such as Gmail or a social networking site such as Facebook has already used software delivered from the internet, or cloud.

Previous business-oriented incarnations of cloud computing have failed to take hold but a growing number of information technology players, including Microsoft, Salesforce.com, EMC, Hewlett-Packard and IBM believe it's now set to take hold.

"It is very obvious that within the next couple of years the way you buy IT is going to change," Kralj says. "All of those decisions that we all face today - will your systems be on-premise or off-premise, will you use real-time infrastructure or virtualisation - are very much becoming irrelevant.

"At the end of the day all that you will want will be top-level services coming from this big IT cloud."

Kralj says that Microsoft is already re-designing its software systems to suit that vision and he notes that a number of key products, including SQL Server and Exchange can already be consumed over the internet.

Cloud computing is also a consideration as the company develops Windows 7 - the next version of its flagship operating system - and Kralj says Microsoft will make a number of important announcements at its Professional Developers Conference in Los Angeles next month.

He won't disclose what those announcements are, but says the company is focused both on developing platforms that can run over the internet as well as on devices that are disconnected from the web.

"A huge number of our competitors are claiming that the operating system is bad and the only thing you really need is a browser. From our perspective we see in the future various types of clients," Kralj explains. "Using browser-based access is just one of the entry points but it's not the only entry point."

That means the company will continue to focus on building software for personal computers, phones and even cars in much the same way that Google, with the launch this week of its mobile phone-based Android operating system, is building software for client devices.

Kralj also maintains that Microsoft will continue to plug away as it has done for the past 30 years, despite vociferous criticism of the way it has dealt with the challenge of the internet.

"Yes, Microsoft wasn't an innovator in each and every space on the web.

"Six or seven years ago it was open source, now it's Web 2.0. Most probably there will be some other new vendor who will try to challenge in another realm. It's how business is always done."

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